Odisha retains No.1 position in the NITI Aayog’s fiscal health index 2026

Odisha, Goa, Jharkhand, Gujarat, Maharashtra Chattisgarh, Telangana Uttar Pradesh, Karnataka and Madhya Pradesh have emerged as India’s top 10 fiscally-wise states based on the NITI Aayog’s 2026 Fiscal Health Index (FHI) for 2023-24, released on Wednesday.

In the 2025 Index, which ranked states on the fiscal situation in 2022-23, Odisha was Number 1 followed by Chhattisgarh, Goa, Jharkhand and Gujarat.

Rajasthan, Kerala, West Bengal, Andhra Pradesh and Punjab are the bottom five of the 18 major states ranked on the index.

Among north-eastern and Himalayan states, Arunachal Pradesh has topped the index followed by Uttarakhand, Tripura, Meghalaya, Assam and Mizoram in the 2026 Index.

The Aayog, in its report, also laid out a roadmap for states to improve their fiscal health suggesting the need to prioritize increasing allocations to infrastructure, health and education to improve long-term growth and expenditure quality, broaden GST and state tax bases through improved compliance and tax administration and maintain fiscal deficits within FRBM norms through disciplined expenditure management.

Besides, it has suggested states with high interest payments to improve debt management and reduce reliance on costly borrowings while adopting medium-term fiscal and debt management frameworks to stabilize debt trajectories.

The Aayog is of the view that since sates are responsible for approximately two-thirds of public spending and one-third of total revenue, their fiscal performance is important for the country’s overall economic stability.

The FHI ranks states on five major sub indices that includes quality of expenditure, revenue mobilisation, fiscal prudence, debt index and debt sustainability

Explaining the rationale for separate ranking of north-eastern and Himalayan states, the Aayog said these states need tailored assessment because of their limited own tax revenue base and dispensed economic activity, high cost of public service delivery due to terrain, greater dependence on the Centre, higher debt levels and larger development and capital spending needs.